Presentation
-
Upload
khanyasmin -
Category
Documents
-
view
530 -
download
0
Transcript of Presentation
Michael Cameron
Chief Financial Officer
11-12 June 2003
www.commbank.com.au
UBS Australian Financial Services Conference
2
The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation, 12 June 2003. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate.
Disclaimer
3
Speaker’s Notes
Speaker’s notes for this presentation are attached below each slide.
To access them, you may need to save the slides in PowerPoint and view/print in “notes view.”
4
Agenda
Long Term Growth Outlook
Commonwealth Bank’s Position
Divisional Focus
Long Term Growth Outlook
6
0
20
40
60
80
100
120
Sep-82Sep-84Sep-86Sep-88Sep-90Sep-92Sep-94Sep-96Sep-98Sep-00Sep-02
Per c
ent o
f nom
inal G
DP
Bank Loans & AdvancesAFI Loans & AdvancesAFI Credit
1860-20001982-2002
1982 1992 2002
Strong credit growth over the last 20 years...
Sources: Cyclical Prudence - Credit Cycles in Australia, Kent & D’Arcy; Commonwealth Research
Per
cen
t of n
omin
al G
DP
In Australia, average total credit growth over the last 20 years has been 12%p.a.
7
...but banking margins have been squeezed
Source: Company Financial Statements
Average Operating Margins*4 Major Banks (1997 - 2002)
*Margin calculated as Total Income / Total Controllable Assets
1997 1998 200120001999 2002
3.9
2.9
3.1
3.3
3.7
3.5
Importance of:
Scale
Brand
Large customer base
Extensive proprietary and third party distribution
8
Expectation premium > 0
Investor returns - natural cycle or structural shift?
Source: Moody's Manual of Investments; Value Management Research Engine; Top Performer Study 2002
1927 1937 1947 1952 1967 1972 1977 1982 1992 1997198719421932 1957 19620
20
40
60
80
100
120
140
160
180
200
%Ratio of Market Value of Companies Over Fundamental Value
(1926 - 2002)
2002
9
$m
Total Net Retail Fund Flows(for quarter ended)
Source: Plan for Life (ex Cash)
Equity Markets
Source: Bloomberg
Weak equity markets and declining fund flows
Index(Base 100)
-33%
-11%
MSCI World All Ordinaries
Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03
55
70
85
100
0
1000
2000
3000
4000
5000
6000
7000
Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03
10
Projected Size of Various Product Segments
$ B
illio
nRecent trends shaping the future of funds management...
Strong inherent growth expected, particularly retail
Growth of mastertrusts
Industry consolidation
Institutionalisation of distribution
Industry commoditisation
Source: DEXX&R projections February 2003, assumes 5% pa post-fee returns
0
50
100
150
200
250
300Value at June 2002
Projected Value to June 2012
11
Projected Size of Various Product Segments
$ B
illio
n
...and the life insurance industry
Strong industry growth
to continue
Repricing of products
Product rationalisation &
customer migration
Increasing regulation
Source: DEXX&R projections February 2003
0
1
2
3
4
5
6
7
Term & Trauma Disability Group Risk
Value at June 2002
Projected Value to June 2012
12
Summary
Long Term Growth Outlook
Credit growth will slow
Margins will decline
Funds Management and Insurance to grow
Commonwealth Bank’s Position
14
Organising to meet current and longer term challenges
Immediate Environment: Productivity Implementation of strategic initiatives
Longer Term Environment: Leverage key competitive strengths Scale Brand Risk Profile Products and Businesses Distribution Innovation People
15
Our starting position
Source: CBA portfolio analysis 2003
Commonwealth Bank Market Shares*
Merchant Acquiring
Sovereign
Deposits
Transaction Services
Credit Cards
Home Loans
Global Markets
Asset Finance
Managed Investments
Life Insurance
Corporate and Business Lending
Institutional Banking Products
New Zealand Deposits
New Zealand Lending
Property Managed Funds
General Insurance
Hong Kong
*Sorted by market share rank
3%
5%
9%
13%
15%
17%
18%
15%
15%
15%
16%
20%
22%
22%
25%
31%
36%
0% 10% 20% 30% 40%
1
1
121
12
21
1
Rank
16
Premium Financial Services
Investment & Insurance Services
Institutional & Business
Services
Personal banking
customers, Small business banking
customers
Branches, Ezy-Banking, ATM,
EFTPOS, Phone, On-line,
Mortgage brokers
Retail Banking Services
Premium client including
professionals and business
Agents, Brokers, Financial Advisers
Institutional, Corporate,
Commercial business
customers
Relationship managers, Premium
investment centres, phone,
on-line
Agents, Branches,
Brokers, Financial advisers, Premium
investment centres,
DirectDealer-ships, Institutional
clients
Relationship managers, Business centres
Finance, Risk Management, Human Resources, Strategy, Technology, Legal, Secretariat
A re-aligned organisational structure
Customer Group
Channels
Support
InternationalFinancialServices
Personal, Business, Rural, Corporate and Commercial customers,
Agents, Brokers and Financial
Advisers
Agents, Brokers, Financial advisers, Branches,
Internet, Call centres, ATM,
EFTPOS, Strategic alliances
17
Deepening our customer relationships
From... To...
Pure cross sell Needs based bundling
Fragmented definition Concise definition
Varied measures Consistent measure
No published targets Transparent targets
Inconsistent group-wide sales and service system
One Group approach
18
Summary
Commonwealth Bank’s Position
Productivity Improvement
The Customer
Divisional Focus
• v
Retail Banking Services
Premium Financial Services
Institutional & Business Services
Investment & Insurance Services
International Financial Services
20
Branch/Agencies
Total Branches 1,016 Total Agencies 3,890
Electronic
Total ATMs 3,116
EFTPOS Terminals 122,767
Online
Netbank customers 2.6m
CBA Market Share 27%
Mobile
Mobile Bankers 216
Direct Banking
Total Calls (02/3 YTD) 110m
Advice/3rd PartyActive Mortgage 252origination head agreements Financial Planners 335Financial Consultants 161
* Ezy Banking - over 758 Woolworths stores
Retail: a leading profile
Our network -
Our staff - 18,000 people (including operations)
Our footprint -
Leading market share in core Retail products ~ total footings of $169.6bn at 31 March 2003
All data as at 30/04/03 unless specified
21
Retail: product positioning
Transaction accounts - simplified and rationalised
Home loans - re-engineered by 2004
Credit cards - growing
Deposits - 65% of Bank funding
Sustainable cost to income ratios
Improved service at lower cost
Increased cross-sell and innovation
Low cost funding platform
22
Premium: a differentiated business model
BankingPlatform
Borrowing Services
Lending Services
Transactional Banking
BrokingPlatform
Advisory Services
Direct Investment
Indirect Investment
Debt Products
Equity Products
Commercial Adviser
Personal Adviser
InvestmentAdviser
FinancialAdviser
Risk/InsuranceAdviser
Client
Primary Relationship ManagerSecondary Relationship Manager & specialised advice
23
Premium: building a long term business
Over 170,000 client relationships migrated by end June 2003
Physical capacity substantially completed
We have recently acquired TD Waterhouse.
Apr 02 Dec 02 Jun 03Relationships 40,000 >75,000 >170,000Staff 830 1,130 1,546Locations 24 25 27CommSec Accounts 685,000 720,000 >1.1MCost to Income: Banking* 48% Equities* 75%
Key Performance Indicators:
24
Institutional & Business: redesign for business customers
Relationship Model
• Deepen relationship
• More clients• Deepen relationship
• More clients• Deepen relationship
• More clients• Deepen relationship
• Deepen relationship• Efficiency gains
• Efficiency gains
Focus of Change
Initiatives
Client Turnover
($m)
>150
10-150
1-10
Client Total Footings
($m)
>5
0.85-5
0.85-5
0.15-0.85
<0.15
Number of
Clients
800
2,200
9,200
4,300
59,000
118,000
MarketShare2002(%)
Cost-to-Income
2002(%)
38
38
41
42
74
26
19
11
19
22
22
DedicatedRelationshipExecutive
Dedicatedteam of BusinessBankers
Segment
Small
Top Tier
Corporate
Corporate
Regional
SMEBusiness
Corporate
Institutional
25
Institutional & Business: improve overall satisfaction levels
Source: Business Finance Monitor October 2002 to March 2003 - businesses with turnover up to $40 million
Satisfaction with Main Financial Institution RelationshipMain Bank clients
7%
9%
32%
32%
21%
5%
8%
24%
34%
29%
6%
10%
26%
32%
25%
5%
9%
28%
33%
25%
Banking (Business Customers)
Very Dissatisfied
Fairly Dissatisfied
Neither Satisfied nor Dissatisfied
Fairly Satisfied
Very Satisfied
CBA ANZ NAB WBC
26
Funds management: building opportunities
$m
• Realise integration benefits, including further rationalisation of legacy systems
• Offer increased style diversification
• Leverage internal distribution opportunities
• Leverage scale to reduce costs
• Grow alternate asset classes
• Increase reputation as manager of international shares
FirstChoice Other Strategic Initiatives
0
300
600
900
1200
1500
1800
2100
2400
2700
3000
3300
May
-02
Jun-
02
Jul-0
2
Aug-0
2
Sep-0
2
Oct-02
Nov-0
2
Dec-0
2
Jan-
03
Feb-0
3
Mar
-03
Apr-0
3
May
-03
FirstChoice - Funds Under Administration
27
Insurance: distribution, service and risk pricing
Increase internal distribution through:
Personal Insurance Consultants
Business Investment Managers
Repricing of premiums
Upskilling of call centre staff
Product rationalisation
Systems migration
Trend in Share of Inforce Premiums (Top 5 Players)
Strategic Focus
Source: Plan for Life
0%
5%
10%
15%
20%
25%
30%
35%
40%
Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02
CommInsure AXA NAB AMP ING
28
International: our geographical presence
* includes Japan, Indonesia, Vietnam, China, Fiji
Life Insurance
Banking Funds Management
New Zealand
UK
Hong Kong
USA
Singapore
Other Asia & Pacific*
29
ASB
11%
CBA Banking
89%
International: ASB Bank a strong performer
CBA
Banking90%
ASB Bank
10%
Net Profit - Banking
ASB Bank represented 10% of the total banking net profit after tax (as at December 2002)
Lending Assets - Banking
ASB Bank represented 11% of the total banking lending assets (as at December 2002)
30
Summary
Divisional Focus
Further improve the service experience
Building on our leading funds management position
Insurance business well positioned
Continue to develop international businesses
31
Key Points
A number of trends are shaping the outlook for financial services: Banking: Slowing growth in a lower margin environment Funds Management: industry dynamics are changing Insurance: positioning to drive growth and efficiency gains
Focus on improved productivity and customer commitment Customer relationship initiatives being implemented in the retail bank Customer migration, service model and product development
well progressed in the premium business New segmentation and service models implemented in the
institutional and business bank Leadership in funds management to continue Insurance business well positioned A sound international strategy Strong growth position
Michael Cameron
Chief Financial Officer
11-12 June 2003
www.commbank.com.au
UBS Australian Financial Services Conference